CPI (Consumer Price Index)
CPI is a statistical measure of a weighted average of prices of a specified set of goods and services purchased by consumers. It is a price index that tracks the prices of a specified basket of consumer goods and services, providing a measure of inflation. Under CPI, an index is scaled so that it is equal to 100 at a chosen point in time, so that all other values of the index are a percentage relative to this one. Most of the major economies like US, UK, Japan, France, Singapore, and China have selected CPI as its official barometer to weigh its inflation. There are 8 groups in which CPI is used. They are: education, apparel, foods and beverages, communication, transportation, recreation, housing, and medical care. Other services like school and government registration fees and electricity and water bills are sometimes counted as well.
WPI (Whole-sale Price Index)
In this method, a set of some commodities and their price changes are used for the calculation. WPI is calculated on a base year and WPI for the base year is assumed to be 100. The data of wholesale prices of all these commodities in the base year and the time for which WPI is to be calculated is gathered. Then the WPI of a certain commodity is calculated. The overall Wholesale Price Index is the weighted average of individual WPI figures. Commodities are given weight-age depending upon its influence in the economy. India is amongst the few countries of the world, which selected WPI as its official scale to measure the inflation in the economy. The WPI can be established using the status of the five groups in basic human commodity namely: manufacturing, agriculture, quarrying, mining, and in the export/import industry.
Now the comparison
WPI-
1. Measure of temporal price change of wholesale transactions of all commodities in the country.
2. The weights of items have been assigned in proportion to their share in total value of transaction (output) in the economy.
3. Measures Inflation at each stage of production.
CPI-
1. Measures the average price of consumer goods and services purchased by households.
2. Weights are assigned in proportion to their share in the consumption expenditure of family of industrial workers in the selected centers.
3. Measures Inflation only at the final stage of production.
To put it in a very simpler way in which the majority could understand, Wholesale Price Index is the middle point of all the prices that the merchants pay for certain goods or services from the manufacturers or traders. While the Consumer Price Index, on the other hand, is also the middle point of all the prices that the consumers, homeowners and private sectors have paid for particular products and services.
CPI is a statistical measure of a weighted average of prices of a specified set of goods and services purchased by consumers. It is a price index that tracks the prices of a specified basket of consumer goods and services, providing a measure of inflation. Under CPI, an index is scaled so that it is equal to 100 at a chosen point in time, so that all other values of the index are a percentage relative to this one. Most of the major economies like US, UK, Japan, France, Singapore, and China have selected CPI as its official barometer to weigh its inflation. There are 8 groups in which CPI is used. They are: education, apparel, foods and beverages, communication, transportation, recreation, housing, and medical care. Other services like school and government registration fees and electricity and water bills are sometimes counted as well.
WPI (Whole-sale Price Index)
In this method, a set of some commodities and their price changes are used for the calculation. WPI is calculated on a base year and WPI for the base year is assumed to be 100. The data of wholesale prices of all these commodities in the base year and the time for which WPI is to be calculated is gathered. Then the WPI of a certain commodity is calculated. The overall Wholesale Price Index is the weighted average of individual WPI figures. Commodities are given weight-age depending upon its influence in the economy. India is amongst the few countries of the world, which selected WPI as its official scale to measure the inflation in the economy. The WPI can be established using the status of the five groups in basic human commodity namely: manufacturing, agriculture, quarrying, mining, and in the export/import industry.
Now the comparison
WPI-
1. Measure of temporal price change of wholesale transactions of all commodities in the country.
2. The weights of items have been assigned in proportion to their share in total value of transaction (output) in the economy.
3. Measures Inflation at each stage of production.
CPI-
1. Measures the average price of consumer goods and services purchased by households.
2. Weights are assigned in proportion to their share in the consumption expenditure of family of industrial workers in the selected centers.
3. Measures Inflation only at the final stage of production.
To put it in a very simpler way in which the majority could understand, Wholesale Price Index is the middle point of all the prices that the merchants pay for certain goods or services from the manufacturers or traders. While the Consumer Price Index, on the other hand, is also the middle point of all the prices that the consumers, homeowners and private sectors have paid for particular products and services.
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